Two inventory review policies on supply chain configuration problem

With increasing business competition and complexity, supply chain provides opportunity to increase business competitiveness. Supply chain configuration is an important strategy to enhance business advantage. It is a vital approach to develop new products and manage dynamic supply chain. In this paper, two inventory review policies, continuous replenishment and periodic replenishment, are modeled in the supply chain configuration problem. Harmony search is used to solve the problem. Numerical example is given to illustrate how the models work. Using three different scenarios of various average on hand inventory rate and work in process rate, both review policies are tested. The proposed model shows that the average on hand inventory plays a more significant role when compared with the work in process.

► Supply chain configuration is an important strategy to enhance business advantage.
► Two inventory review policies in supply chain configuration problems are analyzed based on cost and lead time.
► Harmony search is used to solve the problem.
► The model minimizes the sum of inventory level and adds value to the system.